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Labor vows to fight budget measures

Paul Osborne, AAP Senior Political Writer

Labor will fight key measures in the Abbott government's tax-it or cut-it budget.

They will oppose deregulated university fees, the Medicare co-payment, the fuel tax rise and hits to pensions and the dole, Opposition Leader Bill Shorten says.

Delivering his budget-in-reply speech to parliament on Thursday night, Mr Shorten said the opposition would also campaign on behalf of the states against $80 billion in cuts to schools and hospitals.

Mr Shorten said the Abbott government's first budget not only divided the parliament but divided the nation.

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He called it a budget of broken promises, built on lies and based on a mythical economic crisis.

"A budget that goes out of its way to create an underclass," he said.

Labor's legacy was low inflation, low interest rates, net debt peaking at a seventh of that of major advanced economies, a triple-A credit rating, superannuation savings larger than the entire economy and almost a million new jobs created.

"Let's call the Liberal budget emergency for what it is - an attempt to justify the Abbott government's finally revealed blueprint for a radically different, less fair Australia," he said.

Mr Shorten said modelling from NATSEM (National Centre for Social and Economic Modelling) showed a couple with a single income of $65,000 and two children in school would have more than $1700 cut from their annual budget.

By 2016, the cuts will be more than $6000 a year.

Arguing that not one dollar of the $7 Medicare co-payment will go to recurrent funding for health, he said Labor would fight this measure to its ultimate end.

While it was important to invest in medical research, which the co-payment will fund, the money should not come via a tax on the sick, Mr Shorten said. The premiers and chief ministers had been given no warning of the $80 billion cut from schools and hospitals, and Treasurer Joe Hockey had outsourced the main burden of his savings task to the states.

Mr Shorten said it was also a "Trojan horse" for raising the GST.

Labor would vote against university fee deregulation, which would sell out Australian genius and reject Australian potential.

He said the reduction in pension indexation would also be fought, as would the most heartless measure of tightening Newstart payment access for people under 30.

Labor's plan was an Australia ready for the future, optimistic about the future and investing in the future.

The opposition leader declined to say whether Labor would support or reject another key budget measure - the temporary "deficit levy" on income earners more than $180,000 a year.

But he challenged Mr Abbott to remember everything parliament was about Australia's future and well-being.

"If you want an election try us ... bring it on."

Mr Shorten later said he and his colleagues had yet to decide whether or not to support the deficit levy.

"Our priority is to defend lower middle income earners who are feeling the brunt," he told the ABC.

Mr Hockey later pointed out Labor had said just a week ago they would support the levy.

"They're very confused about what they believe in and they're obviously very confused about what they're going to support," he told reporters in Canberra.

Mr Shorten said Labor believed in corrective action but wanted to prioritise fighting for pensions and lower middle income earners.

He had not had "extended discussions" with crossbenchers on what they might oppose together.